Take 5: Prep Your Budget for Buying a Home
Choosing to enter the home buying process is likely the largest financial decision you will make in your lifetime, so it is not one that should be taken lightly. Ensuring that your other current and upcoming financial responsibilities are under control is crucial to having a smooth transaction and being able to enjoy your investment fully. These tips will help you prepare your budget for purchasing your dream home.
Calculate your monthly income. How much money is coming in every month? This is the amount that is left after taxes, health insurance, and retirement savings are taken out of your monthly salary.
Understand your current expenses. Make a list of all your current recurring expenses month to month. Don’t forget to factor in things like loan payments, gym memberships, car maintenance, groceries, self-care appointments, etc.
Determine where you can find savings. Are there any ongoing memberships or subscriptions you don’t use that can be canceled? Can you cut out your daily coffee or eating out lunch? Make these adjustments right away to start saving more.
Boost your financial standing. Before buying a home, it is recommended that you dedicate extra effort to paying off other debts and boosting your credit score. Taking these steps will help you during the loan approval process.
Don’t move finances around. Your lender will review your bank statements during the pre-approval process and then again during underwriting. Any large withdrawals or deposits may throw a red flag so try to avoid these when possible. If you can’t, make sure you have proper documentation to explain the movement of money.
About Farnan Real Estate
Farnan Real Estate offers clients over 25-years of real estate and client services experience, all with the indelible backing of Patterson-Schwartz Real Estate, Delaware's largest independent REALTOR® and leader in the Mid-Atlantic region. The Farnan team is prepared to guide you through the buying/selling process, connect you with trusted partners and aim to reducing the levels of stress that typically come with buying and selling a home. Contact us today to get started with your home buying, selling or real estate investment experience.